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TENDERING EXPLORING ISSUES WITHIN THE CONSTRUCTION INDUSTRY

The tendering process is a key element of the planning and organisation of a project, including the determination of any Contract Sum, and is pivotal when creating the agreement and conditions that form the Contract.

It is a longstanding point that if there is a dispute or difference in any construction contract then the overriding question will be ‘what did the parties agree and how much for’? In any dispute or any demonstration of a point when it comes to establishing a position it is crucial to understand what in fact the parties agreed to, how it departed from this common intention and why is there a cause for a variation or loss and/or expense claim. If it is this simple, why then is there such confusion and debate over differences that are manifested later in the course of the project timeline?

Given the fact that the common intention of the parties at the time of contract is vital, it must be the case that the preparation time required during the tendering period is critical, however it doesn’t always get the attention it deserves.

During my previous career having firstly qualified as an engineer, I spent a considerable time during the precontract or estimating phase both in planning, sequencing and value of numerous projects. One particular memory is the disappointment of having applied myself to a detailed temporary works scheme and to engage in the possibilities of the buildability of the project, only to be told that all along it was an exercise to be used as a check price, and that the prospects of winning the project were low as there hadn’t been a previous relationship.

There is a very real perception in the world of contracting and tendering that with so many tenders being received by a party, it is sometimes diffi cult to apply the appropriate amount of resources to the tendering process. With the amount of risk that is associated with projects and the effects of poor coordination and planning, the time afforded to any contractor or sub-contractor is woefully short when considering what is at stake, for what can be a lengthy project timeline. A usual response by many contractors is that if the tender documents are examined correctly and the proposals are clinically priced then most certainly it will be more expensive than the competitors.

Tendering is a phase of the project that apparently will have low levels of trust. The transitioning between one and two stage tendering has only raised further questions as to how parties will engage further and how the constant dilemma between cost certainty and risk/developed design will be an area that is constantly debated.

In many of the seminars that I provide, I often describe the difficulties surrounding Letters of Intent. One example springs to mind where a contractor had thought it had excluded any responsibility for groundwater with an email during the tendering process, only to find that the incorporated conditions of contract had included this risk within its package.

But more often than not, aside from technical points of clause construction, there is usually a seemingly wide disparity between the specifications, activities and what the intended program or sequence of events show. The ability to set out and maintain a well-developed program and sequence of events that directly mirrors the Contract Sum Analysis activities, will be essential in order to prove one’s assertions later.

The above points are typical in an industry where the levels of disputes remain far too high and from all of the disputes I have been involved with either as an engineer or as a practicing solicitor, it is during this period of time towards the formation of the contract that is the birthplace of the disputes later on. Those disputes will usually manifest themselves in the final third of the project timeline, but make no mistake, those problems were first created during the tendering process which were codified at the time of contract formation.

Silver Shemmings Ash LLP runs regular seminars for BITA members on different topics to enable them to more effectively manage their businesses and plan for the future. Next seminar: 8th April 2020, Leonardo City Hotel from 5pm and will be a Post-Brexit Round Up